You’ve officially made it through dental school. Congratulations! Now, you’re looking for an associateship to launch your career. When doing so, we recommend working with an attorney to review your employment agreement before joining a practice as a dental associate.
In this Q&A with Joseph Jordan, we’ll tell you the red flags to look out for in an employment agreement. This will help you make sure you’re entering a contract that will benefit you in the long run.
Whether it’s an independent contractor agreement or a true W2 agreement, we advise that young dental associates go into an employment scenario with a W2 employment agreement. That way, taxes are withheld from your paycheck, so you don’t have to worry about doing your own withholdings or quarterly taxes.
It can be structured in a number of ways:
What’s beneficial about a hybrid structure is that the dental associate can make more if they’re working harder. Plus, it gives them a stable base pay, which can help young doctors just starting their careers feel more comfortable.
What we watch out for is a future advance against earnings. The main reason we don’t like this for young doctors is that when they get paid, they put it in the bank. However, in a future advance against earnings situation, they may find out later that they didn’t earn as much as they were paid per their percentage of collections. So now the dental associate is in a situation where they owe money back to the practice.
When it comes to benefits packages, generally with young dental associates, paid vacation is omitted. However, sometimes lab bills and malpractice are covered. If paying malpractice is mentioned, make sure to read the fine print. In some cases, the agreement may state that they will pay your malpractice. But a closer look can reveal that the expense will be deducted from your compensation at some level. Figuring out what your actual benefits are vs. what’s been paid on your behalf out of your own paycheck is essential to understand.
Additionally, a comprehensive understanding of pay, the compensation structure, and all of the benefits can help you determine the best opportunity to pursue.
This is a big question – how do you get out of the contract? Young doctors tend to start their first job quickly because they feel like they need the money to start paying back loans. It’s a lot of pressure. Because of that, they may not get an advisor or attorney to look at their employment contract.
The problem, in this case, may not be what you’ve agreed to for your current position, but what you’ve agreed to after the fact in the
termination language. Can you terminate the contract if you want out? In some cases, the contract will state that the employer is only required to give a week or 30-day notice for termination, while the dental associate is required to give 90-day notice or longer.
Obviously, that is uneven. We like to make sure it is equal across the board.
Additionally, some contracts won’t allow the dental associate to terminate the contract until after the first year. These are things to be aware of. It’s all about thinking about the future. Instead of negotiating an extra one or two percent on your compensation, negotiate your ability to leave a bad situation.
We really see this come into play when a doctor knows they want to own a practice in a year or two. If the dental associate is in a year-long employment agreement and has to give a 90 or 120-day notice, they could miss out on an ownership opportunity that pops up. A 30-day notice should be enough time for both the employer and the doctor.
There are many contracts that are totally blank when it comes to the schedule, or it lists a blanket statement like “at the employer’s discretion.” Here’s the problem – when you agree to an employment contract, you’re agreeing to whatever the practice’s schedule is. Is the practice open three days per week? Five days? Are they open on weekends? When are you expected to cover emergency visits? Does the practice rotate emergency coverage?
The best scenario would be when the employment agreement spells out the number of days and hours per day. Knowing those expectations upfront is more ideal than renegotiating once the contract is in place.
This can prevent a dental associate from working in a specific geographical location for a certain amount of time. In that scenario, if you want to own a practice in your hometown, our advice is to avoid working in your hometown as a dental associate.
The typical restrictive covenant lasts for 18 months, but sometimes we see them extended for up to two years. The mileage range, on the other hand, varies widely. It really depends on how densely populated the region is. For instance, if the area is densely populated, the range could be a couple of miles; but if it is a more rural area, it could be 20 miles.
That’s the non-compete of the restrictive covenant. The other part can include non-solicitation. That means when you leave the practice, you can’t try to recruit their employees or patients.
Have additional questions about employment agreements for dental associates? Contact Spaugh Dameron Tenny. We’ll be happy to help.
Joseph Jordan, JD is a dental exclusive attorney and the president of JPA Dental Transitions. As an expert in the areas of practice transitions, associateship planning and placement, and successful negotiation tactics, Mr. Jordan is dedicated to offering superior service to all clients in the dental industry. At JPA Transitions, he offers dental brokerage services and personalized transition guidance for doctors who want to sell or purchase a dental practice.
Congratulations – you made it to the end! You are now a dental school graduate and a practicing dentist. Sometimes working in the real world can be ...Read More →
Are you feeling the pressure of your high student loan payment? Many graduates, especially doctors and dentists, deal with high loan payments since ...Read More →
For over 50 years, Spaugh Dameron Tenny has provided comprehensive financial planning for physicians and dentists across the U.S. In addition to providing personalized advice, we walk our clients through their options to help maximize finances and maintain financial security.
Securities, investment advisory and financial planning services offered through qualified Registered Representatives of MML Investors Services, LLC. Member SIPC. Supervisory office: 4350 Congress Street, Suite 300, Charlotte, NC 28209, (704) 557-9600. Spaugh Dameron Tenny is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies.→ Check the background of your financial professional on FINRA'S Broker check